Crude oil's rally extends above 79.05 as market sentiment stays robust. Although USD recovers amid speculations that Eurozone officials may show concerns about euro's strength at a meeting today, it does not affect the bullishness on energy prices. While OPEC members do not think recent rally in price has been driven by shortage in supply, they warn regulators taking action to prevent excessive speculations.

Currently trading at 78.7, WTI crude oil price has risen for 8 consecutive days gaining +13% in 2 weeks. Although major oil agencies upgraded oil demand outlook and weekly inventory report showed unexpected decline in oil products, a sustainable oil rally requires actual improvement in demand which we haven't seen yet. At current price level, crude oil is vulnerable to correction.

At an interview by the Wall Street Journal, OPEC Secretary-General Abdalla El-Badri said that oil price between 65-75 were sufficient to maintain investment and development within the industry. However, he believed that recent rally in oil price was not due to lack of supply but to speculators, and that the cartel wouldn't intervene or push extra supply into the market. Mr. El-Badri added, 'If we see the price is going up because of a shortage of crude oil in the oil market, I'm sure OPEC would intervene and correct this'.

Gold price trades narrowly with a soft tone in Asia Monday as the dollar rebounds. Against the euro, USD rises for the second days (currently trading at 1.487), as the market anticipates policymakers will discuss about euro's strength as they meet in Luxembourg today. Last week, Jean-Claude Junker, the Prime Minister of Luxembourg, said that euro's gain will be discussed at today's meeting as the members 'don't like excessive volatility in exchange rates and disorderly movements'.

British pound retreats after jumping +3.2% to a 3-week high last week. Worries about expansion of the asset purchase program re-emerged after MPC member Posen showed signs of backing an extension of the current 175B pound program.

Commitments of Traders
  • Crude Oil: Net speculative long positions surged to 68836 contracts, the highest level since the first week in January, 2009, as oil price rallied. There's risk of correction in oil price in the coming week as investors take profits on recent rally.
  • Natural Gas: Net shorts rose for the first time in 4 weeks. Recent strength in gas price has lost steam as gas storage remained at record level
  • Gold: Net speculative long positions reached record high of 253955 contracts. Decline in net long positions will be seen in the coming week as the yellow metal retreats after reaching record high level
  • Silver: Net speculative long positions surged again. Recent rally in silver have been simply an amplification of gold's rise. Similar to gold, silver is prone to a correction before resuming the uptrend
  • Platinum: Net long positions jumped to 19409 contracts as platinum price extended recent rally. Long liquidation should be seen in the coming week as auto production slid after the 'cash-for clunkers' program